Importance of Foreign Market Entry

For a business organization to grow, it has to constantly find new opportunities to exploit. Globalisation is a large driving force that has led to the trend of the rising number of business organizations operating beyond their home country.

As with globalisation,there is now a decrease in trade barriers which makes doing business abroad easier.Likewise,there is also an increased in the number of competitors in the local market and many a times, a organisation has to expand into a new foreign market so as to achieve a higher market share.

One major pushing force for a organisation to go abroad is the limited opportunities in the local market which could either have no need for the organisation’s offerings or the market could be quite saturated.A global market,on the other hand,offers endless possibilities and a bigger market.Consider a small country like Singapore which only has a population of close to 5 million, a business organisation can do so much more with an expansion overseas whereby the population size is many times the local population.Local companies like Eu Yan Sang (traditional chinese medicine) or Prima Taste have their products located in different parts of the world where there are definitely a demand for it.Consider the Chinatown in London where many Chinese nationalities are currently residing/studying at.Chinese products that are found in their home countries are bound to appeal to them due to the brand familiarity as well and if there is a demand for such products,business organisations can reap from the benefits by supplying these products.

This is also the case for many agriculture industries whereby the production of the products are far much more than what the population can consume.The amount of coffeebeans that are harvested in Latin America are more than sufficient for its population and organisations can make a profit out of it by actually selling the excess.

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Expansion into foreignmarkets can be achieved via the following mechanisms:
Exporting
is the process of selling of goods and services produced in one country to other countries.
There are two types of exporting: direct and indirect.
Direct exports
Direct exports represent the most basic mode of exporting made by a (holding) company, capitalizing on economies of scale in production concentrated in the home country and affording better control over distribution. Direct export works the best if the volumes are small. Large volumes of export may trigger protectionism.
Types
Sales representatives
Sales representatives represent foreign suppliers/manufacturers in their local markets for an established commission on sales. Provide support services to a manufacturer regarding local advertising, local sales presentations, customs clearance formalities, legal requirements. Manufacturers of highly technical services or products such as production machinery, benefit the most form sales representation.
Importing distributors
Importing distributors purchase product in their own right and resell it in their local markets to wholesalers, retailers, or both. Importing distributors are a good marketentry strategy for products that are carried in inventory, such as toys, appliances, prepared food.
Advantages
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